The fashion watch market is taking a serious direction in 1990. Coming off a decade that saw the market flooded with novelty timepieces and dramatic sales increases, the fashion watch industry has headed into the Nineties with a more mature outlook.
While executives say there is always a place for novelty watches, that market is narrowing, and quality time-pieces featuring sophisticated looks will set the pace for growth in the Nineties.
Over the past six years, retail sales of fashion watches in department stores grew from an estimated $50 million to current sales of about $500 million, according to industry sources.
Some retailers and suppliers add, however, that the pace has slowed over the past 18 months. While most attribute this more to an overall lag in retail sales, some see it as a result of too much emphasis on novelty watches.
Sales of Swatch watches, the line from Swiss conglomerate SMH that’s universally credited with igniting the fashion watch business with its popular-priced plastic numbers, have declined over the last year and a half, according to Richard Shriner, vice president of marketing and sales for Swatch Watch USA, the firm’s U.S. subsidiary.
“Since the whole fashion watch business hasn’t been healthy, our decline is actually less than that of the industry as a whole,” Shriner claimed, although he declined to cite figures. Many industry sources say the line still commands about 20 percent of U.S. fashion watch business.
Shriner noted that many of its novelty watches, with such treatments as oversized plastic cases with wide fabric bands, had felt the impact of increased competition. “A few years ago, we didn’t see the number of manufacturers marketing novelty low-priced watches that we do now.” For fall, Shriner said Swatch will concentrate on more heavily promoting its metal and leather lines, which are priced above its plastic watches.
Industry executives concur that future growth in fashion watches will occur at many price levels, from timeless luxury-inspired styles to whimsical popular-priced novelty watches.
“Right now, there’s really no one look or price range that is the leader in fashion watches, and I think that will continue,” said Jane Tuma, vice president and fashion director of accessories at Saks Fifth Avenue.
“Consumers are looking for variety — from fine classically styled watches that will last forever, to fun fashion looks that you wear for a season or two,” Tuma said.
“There is still a strong demand for diversity in fashion watches,” said Ken Monroe, vice president and general merchandise manager of accessories at Marshall Field’s, Chicago.
Nevertheless, industry executives expect retailers to approach the watch business more cautiously in the Nineties. Trends can heat up and cool off in quick order.
Retailers couldn’t keep Soviet-in-spired and actual Russian-made watches in stock when they first hit the market last July, but by the Christmas selling season, the enthusiasm at some stores had ebbed. In January, for example, Macy’s Herald Square had markdowns of between 30 and 45 percent in the Paketa Soviet watch line.
However, Alan Tucker, president of Time Exchange, the U.S. firm that markets the Russian-made line, contended the popularity of the watches has not diminished and he has gotten reorders from several key retailers.
Tuma at Saks pointed out that when it comes to fads of any sort “you’ve got to run with it at the right time, and then you’ve got to bail out when it’s no longer hot.”
While diversity is key, retailers and suppliers can cite some segments of the watch business they see emerging as leaders in 1990.
Jewelry-inspired watches are one category retailers say is growing. Anne Klein has traditionally been a leader in this area, but the line is now getting competition from newer resources, such as Monet and Carolee.
Jewelry firms are finding that branching out into watches is an easy transition. “Merchandisingwatches and jewelry together makes a stronger statement,” said Carolee Friedlander, owner of Carolee Designs, Greenwich, Conn. Her firm introduced watches a year ago.
Carolee’s bracelet and pendant watches, which wholesale from $75 to $175, did close to $2 million in wholesale volume the first year, she said.
Joanne Hart, fashion director of accessories at Macy’s Northeast, said jewelry-inspired watches are a key classification. Among brands she cited were Monet, Gottex and Anne Klein.
The Anne Klein watch line, which wholesales from $45 to $90, is also a top seller at Marshall Field’s, said Monroe. “I think it’s partly due to a strong designer-name recognition on the part of the consumer.”
Mark Odenheimer, vice president of Sutton Time, New York, the firm which has held the license for Anne Klein watches for 15 years, said sales have grown fourfold since 1986.
Sources put annual sales of Anne Klein watches at around $25 million.
The firm also markets a number of whimsical styles, including its Garfield and Fido Dido watch lines, wholesaling from $12.50 to $30, and produced under licensing agreements with United Media Licensing, New York.
Some industry executives point to the Guess watch as an example of the enormous volume that a line can capture. Although the line is only five years old, current wholesale volume is in the neighborhood of “about $50 million,” according to Mickey Callanen, president of The Callanen Group, Norwalk, Conn., which holds the license for Guess as well as Monet watches.
Callanen attributed most of the growth to the strong consumer name recognition. The Guess line wholesales from $14.50 to $47.50 with most styles priced at under $30, and Monet wholesales from $25 to $47.
Gucci and Fendi are among other lines that have gained prominence. Over the past few years Gucci retail sales have increased dramatically, and the newer Fendi watch line has received a good response, retailers said.
Many sources attribute the favorable response to a growing consumer interest in designer-namewatches.
Fendi is produced under a licensing agreement with Ultima Brands, Marlboro, N.J. The line, which was launched in August of 1988, wholesales from $125 to $375. In 1989, Fendi watches did about $22.5 million wholesale, according to Thomas Venables, president of Ultima Brands.
“Our U.S. wholesale volume increased from $5 million to $75 million in less than 10 years,” said Steve Hitter, chief marketing officer for The Severin Group, a Swiss-based firm that holds the license for Gucci watches.
Hitter said current top sellers in the 15-year-old line, which is distributed from its Irvine, Calif., office, include round watches with leather straps and cuff-style bracelet watches. Wholesale prices in the line range from $95 to $450.
“Our market research shows that when people talk about buying a status watch, one of the names they cite is Gucci,” asserted Hitter. “But since many of our styles are set to retail for less than $200, it’s really an affordable luxury status symbol.” He said the firm is projecting sales to increase 13 percent over last year.
The industry’s more serious attitude is not stifling new watch lines. Set to launch this spring are Perry Ellis Watches, a licensed line from CSC Time, Rockville Centre, N.Y., and Swisstime, the newest division of SMH.
This is the first time that Perry Ellis International has licensed its name for fashion watches, according to a spokeswoman for the firm. Bernie Costelli, vice president of sales for CSC Time, said 25 Perry Ellis styles, wholesaling from $47.50 to $97.50, will be introduced at the March market. The firm is projecting a first-year wholesale volume of $2.5 million for the line, he said.
Pat Quigley, president of Swisstime, said a full product launch, which had been scheduled for January, has been delayed until May. He attributed the delay to unexpectedly high demand and to a request from retailers for advertising support.
The line of watches wholesales from $22.50 to $62.50 and features classic metal and leather styles. Quigley said the firm is now planning on shipping 200,000 watches on May 1.
He said a limited test at Marshall Field’s for holiday did well, in part because the launch was supported with newspaper advertising. He said many retailers requested that Swisstime’s national advertising campaign be timed with the launch of the watches.
Swisstime is aiming at first-year sales of $33 million, a marked increase from the firm’s initial projection last December of $5 million. “I was being cautious in the beginning because of my newness to the industry, but because the initial response has been so good, we’ve had to rework our figures,” he said.
Moreover, in addition to the rash of newcomers to the watch industry, some of the oldest U.S. watch firms are moving more aggressively into the fashion watch business.
Bulova Corp. in New York and Timex in Waterbury, Conn., are two firms with over 100 years in the watch business each who see an opportunity for growth in the fashion market.
Bulova, which last year entered the fashion watch market in a limited way with its Classic Moments collection, a joint venture between Bulova and Circle Fine Art, Chicago, Ill., is now shipping a new line of novelty watches for spring called Time Effects by Bulova, using the logo TFX on all face designs.
Rob Ryan, vice president of marketing for the firm, commented: “Retailers want to deal with people who are in the watch business, not somebody who was in handbags last year and will be in scarves next year.
“Rather than introducing new styles only during traditional market periods, we will respond to the fashion trends as they happen and introduce styles throughout the year.”
Ryan said the firm is expecting strong sales in the line’s initial offerings, which include themes such as Dynamix, featuring futuristic, high-energy designs, and Escapes, which features New Age-inspired nature scenes on the dials.
Wholesale prices in the TFX line range from $20 to $34.95.
Dave Rahilly, vice president for U.S. marketing and sales for Timex, noted the firm is going after department store business with a renewed emphasis.
“When the fashion watch business really started to take off in the early Eighties, Timex added a professional fashion design staff and tried to build a fashion watch business. But because there were so many status names on the market, it was very tough to convince consumers that Timex can stand for fashion as well as for quality,” Rahilly said.
He said the new line being introduced this spring is designed to key into current fashion and cultural trends. Called Images, the line will feature 15 styles, including such ideas as oversized bezels with either metal or black leather straps, and black matte metal dials with bright geometric accents. Thewatches will wholesale from $17.50 to $25.